Fluorescent lights shone bright on the innumerable hoardings and banners that welcomed Japan's prime minister Shinzo Abe on his recent visit to the country. The following roadshow was nothing short of a grand affair. It was not just a celebration of the commencement of the Mumbai-Ahmedabad high speed rail project but one that highlighted the “special strategic and global partnership” between the two south Asian countries. Japan has agreed to provide a soft loan of Rs. 88,000 crore for the project that would cost Rs. 1.1 lakh crore. The iconic 'Shinkansen' bullet train technology is expected to be inaugurated by August 2022 and is only one of the many projects to be rolled out in the space of transport (55%), water (16%), energy (13%).
Since 2007-08, the Japan International Cooperation Agency has given soft loans worth Rs.150,000 crore to India, making it the largest recipient of the 150 countries it operates in. The soft loans are repayable at 0.1-1.4% over 30-50 years, which is a compelling and very attractive deal, especially for the infrastructure projects.
In the past three years, FDI inflows from Japan have also tripled. But they have focused on strengthening security cooperation as well – which might eventually help in setting up a strong security architecture in the Indo-Pacific region. The two prime ministers also signed a nuclear deal – Japan’s first one with a non-signatory to the treaty on the Non-Proliferation of Nuclear Weapons. Currently, the two countries have signed 15 agreements in various sectors including infrastructure, skill development etc, which includes a massive project in Varanasi as well as the North-east. Some of the confirmed projects are the bullet train, the Delhi metro and the dedicated freight corridor. While prime minister Modi surely enjoys forming ‘strategic’ ties, only time will tell us how successful these projects prove to be.
Although political observers cite the rising influence of China behind the cementing of Indo-Japan ties, the partnership has great merit in terms of technology and the financial advantage we stand to gain. At a time when consumer spending in the country is wavering, and the economy is in a precarious state, public-funded infrastructure can prove to be an important saviour for the economy. Japan, with its technology, and cheap capital will surely be a blessing.